The Golden Age of Consumer Investing

Big Food will spend the next decade buying what it can't build.

“I’ll have what she’s having.” — When Harry Met Sally, (1989)

For twenty years, venture capital told a simple story: software eats the world, and the returns follow the code. Fund the infrastructure. Back the platforms. Let someone else figure out what runs through the pipes.

The pipes are full now. The returns have moved to the water.

Something shifted in American consumption over the past five years. People read labels. They actively avoid the processed food that built the twentieth century’s largest companies. Ozempic and its cousins rewired how America thinks about what it puts in its body. And the founders who saw this coming are building some of the most compelling businesses in venture, while most investors are still chasing software.

At Sugar Capital, we invest at the seed stage in consumer brands and the commerce infrastructure that powers them. The brands are the thesis most people see. But we also back the picks and shovels, the software and services that help brands manage inventory, optimize pricing, run retail operations, handle fulfillment. Our brands use our infrastructure companies. Our infrastructure companies learn from our brands. The portfolio compounds on itself.

The economics would have seemed impossible a decade ago. A gummy vitamin company reaching $300 million in revenue on $20 million of primary capital. Contribution margins above 40 percent. Meaningful EBITDA before the Series B.

I watched a founder last month walk into a meeting with a functional beverage people actually want to drink. She’s done $40 million in her second full year, profitable, and the buyer at Target returns her calls the same day. Ten years ago, that company doesn’t exist. The supply chain isn’t there. The consumer isn’t there. The retailer isn’t interested. Today, she’s turning down term sheets.

That’s not an anomaly. That’s the new pattern.

The structural advantage is distribution. Retail still captures six of every seven American purchases. When a product hits Target or Walmart and velocities are strong, growth becomes non-linear. Shelf space solves customer acquisition cost. It eliminates the shipping margin drag that killed the first wave of DTC brands.

Most investors don’t understand why retail changed. Target and Walmart aren’t bringing in healthier brands because they care about wellness. They’re doing it because their core customers are aging. The twenty-eight-year-old who buys a premium gummy vitamin is the same twenty-eight-year-old who will buy diapers, furniture, and electronics for the next forty years. Retailers are using better-for-you brands as customer acquisition for their entire ecosystem. The emerging brand gets distribution. The retailer gets demographic renewal. The incentives finally aligned.

Before Sugar Capital, my wife Lisa and I built POPSUGAR from a blog into a media company with 100 million readers. We sold it in 2019. We lived the shift from the operator side. We watched retailers change how they work with emerging brands. We saw the distribution window open.

Now look at the other side of the table. The largest food companies in the world, Kraft, Nestlé, PepsiCo, Coca-Cola, are barely growing. Their innovation pipelines are empty. Regulatory pressure and lawsuits are forcing them to clean up portfolios built on sugar and seed oils. With RFK at HHS, that pressure is just beginning. They cannot build the next generation of brands internally. So they wait, pay up, and acquire what they can’t create. A consumer brand doing $100 million in revenue can sell for three to five times that.

Tariffs could squeeze margins. A recession could push consumers back toward value brands. The GLP-1 tailwind could shrink the supplements market rather than expand it, or it could create an entirely new category of consumers who care about what they put in their bodies for the first time.

The risk in consumer is visible. You can see a brand losing velocity. You can watch a product get pulled from shelves. The decline is slow enough to course-correct. Enterprise software dependent on IT budgets and platform dynamics doesn’t offer that same warning. One shift in buying behavior, and the ARR that looked permanent disappears in two quarters.

Consumer risk is legible. That matters more than most investors appreciate.

Entry valuations remain attractive. Seed rounds at $15 to $20 million post. The math works at realistic exit sizes. A $250 million acquisition returns a fund when you entered early. These aren’t lottery tickets requiring billion-dollar outcomes.

Americans spend $1.5 trillion a year on food and beverage. The brands they trust are being rebuilt from scratch by founders who understand that health is no longer niche. It’s the baseline expectation.

Most of venture capital hasn’t noticed yet. They’ll get here eventually. The smart money always does.

By then, the best founders will already be funded. The best brands will already be built. And the acquisition multiples will already be priced for competition.

The pipes were the opportunity of the last era.

The water is the opportunity of this one.

We’re not waiting for the rest of the industry to catch up.